Once again, the market is seeing some midday selling. That has been another recent change in patterns that is a bit troubling. The selling of "good" news, the disappearance of pockets of strong momentum and the less-aggressive dip-buying are other developments that have given this market a more bearish tinge lately.
On the other hand, we have very positive breadth today, and it sure looks as if a lot of folks were caught unprepared for this strength. The problem is that trusting that this is another V-shaped bounce just like those at the beginning of September and October is a very tough call, especially with the jobs report pending tomorrow.
Right now it looks like the exact same pattern that we have seen the last two months. We sell off sharply and look ready to gain downside momentum as the month starts, but the buyers make a stand and send us straight back up. As I've commented, that is not what you normally expect to see technically, but it has happened consistently in this market.
So the million-dollar question is whether the pattern of V-shaped bounces to start the month continues or whether we stall out as we run into overhead resistance. I have to stick with the charts and question how easily we can go straight back up, but this market has made those who stick with a disciplined approach look foolish. It could easily happen again.
P.S. Will you be there when Cramer makes his next move?
Strong brands and companies with vast market exposure can help bolster your portfolio. Jim was able to lock in a 64% gain by buying Ingersoll-Rand at $13 and selling at $22.50. Action Alerts PLUS members were the first to see these moves. Were you among them? Get Free Access Today!
James "Rev Shark" DePorre is the author of Invest Like a Shark: How a Deaf Guy with No Job and Limited Capital made a Fortune Investing in the Stock Market. He is founder and CEO of Shark Asset Management, an investment management firm, and he also operates sharkinvesting.com, an interactive online community that serves and educates active investors. DePorre holds business and law degrees from the University of Michigan, is a member of the Michigan Bar Association and a former tax attorney and CPA. He lives in Anna Maria Island, Fla., with his wife and two children. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Rev Shark appreciates your feedback; click here.
RSS FEEDS
PODCASTS
